Davies, who has been working with Corsair Capital LLC, a
New York-based private-equity firm, has approached Standard Life
Plc (SL/) as well as sovereign wealth funds about making an offer for
some of the government’s 39 percent holding, said the person,
who asked not to be identified because the talks are private.
The group hasn’t reached an agreement with the Treasury, which
is weighing other ways to dispose of the stake, including by a
sale to money managers, the person added.

U.K. Financial Investments Ltd., the body that oversees the
government’s stakes in Lloyds and Royal Bank of Scotland Group
Plc, last month invited banks to apply to manage the sale of the
holdings. Firms have until tomorrow to submit their offers and
be considered for the offerings.

Lloyds shares exceed the level at which the government says
it will break even on its holding after providing a 20 billion-pound ($30 billion) rescue to the London-based lender almost
five years ago. The stock closed at 64.63 pence in London on
July 5, above the 61 pence at which the government has said it
expects to break even on the investment. The lender has a market
value of 46.2 billion pounds.

Davies’s group may try to buy at least 10 percent of the
lender and is prepared to offer more than the government’s 61-pence break-even price, one of the people said.

George Osborne

Lloyds spokeswoman Shella Ali declined to comment on the
discussions as did officials at Corsair Capital, a U.S. private
equity that targets the financial services industry, Standard
Life Investments, UKFI and the Treasury. Sky News first reported
Davies’s talks.

Chancellor of the Exchequer George Osborne said last month
the U.K. government is “actively considering” selling shares
in Lloyds. RBS’s return to private ownership is still some way
off because it’s weighed down by too many poor assets, he told
financiers at a speech at London’s Mansion House on June 19.

Davies, 60, was Britain’s trade minister under the last
Labour government. From 2006 to 2009 he was chairman of Standard
Chartered, the London-based lender which makes more than three-quarters of its earnings in Asia. He joined Corsair as vice
chairman and a partner in 2010.